To prevent foreign states that do business, issue securities, or
borrow money in the United States, and then fail to satisfy United States
court judgments totaling $100,000,000 or more based on such activities, from
inflicting further economic injuries in the United States, from undermining
the integrity of United States courts, and from discouraging responsible lending
to poor and developing nations by undermining the secondary and primary markets
for sovereign debt.

IN THE HOUSE OF REPRESENTATIVES

May 6, 2011

Mr. MACK (for himself, Mr. KING of New York, Ms. LORETTA SANCHEZ of California,
Mr. CARNAHAN, and Mrs. MALONEY) introduced the following bill; which was referred
to the Committee on Financial Services, and in addition to the Committee on
Foreign Affairs, for a period to be subsequently determined by the Speaker,
in each case for consideration of such provisions as fall within the jurisdiction
of the committee concerned

A BILL

To prevent foreign states that do business, issue securities, or
borrow money in the United States, and then fail to satisfy United States
court judgments totaling $100,000,000 or more based on such activities, from
inflicting further economic injuries in the United States, from undermining
the integrity of United States courts, and from discouraging responsible lending
to poor and developing nations by undermining the secondary and primary markets
for sovereign debt.

Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Judgment Evading Foreign States Accountability
Act of 2011'.

SEC. 2. STATEMENT OF PURPOSE.

The purpose of this Act is to prevent foreign states that do business, issue
securities, or borrow money in the United States, and then fail to satisfy
United States court judgments totaling $100,000,000 or more based on such
activities, from inflicting further economic injuries in the United States,
from undermining the integrity of United States courts, and from discouraging
responsible lending to poor and developing nations by undermining the secondary
and primary markets for sovereign debt.

SEC. 3. FINDINGS.

Congress finds the following:

(1) Foreign states that do business, issue securities, or borrow money in
the United States, and then refuse to satisfy judgments of United States
courts entered against them in connection with disputes resulting from these
or other commercial activities, directly or indirectly inflict billions
of dollars of damage in the United States, and undermine the credibility
of the United States courts.

(2) Foreign states that engage in such behavior can infect the management
of corporations and other entities that they own or control with their profligate
and irresponsible habits. When negligent ethical standards permit government
officials to repudiate lawful judgments, the injury to United States taxpayers
is multiplied.

(3) The Republic of Argentina is a primary example of a foreign state that
has incurred large debts in the United States, defaulted on those debts,
and then refused to honor lawful judgments of United States and other courts
ordering repayment. In 2001, Argentina defaulted on more than $81,000,000,000
in sovereign debt, the largest such default in history. In 2005, after refusing
all efforts by creditors to negotiate the terms of an exchange offer, Argentina
unilaterally offered lenders approximately 27 cents on the dollar in its
restructuring deal, far below the international norm for sovereign debt
restructurings. Argentina repudiated the debts owed to the unprecedented
proportion of bondholders who rejected that offer.

(4) Argentina still owes United States bond holders more than $3,500,000,000.
Overall, the default and restructuring by Argentina have cost United States
bondholders, taxpayers, and share holders more than $10,000,000,000.

(5) Argentina has the capacity to pay its external creditors. Argentina
now holds more than $54,000,000,000 in reserves. Argentina chose to pay
off its $9,800,000,000 debt to the International Monetary Fund in full in
2005, years before it was due, and has similarly announced an intention
to pay sovereign creditors of the Paris Club, of which the United States
is owed $360,000,000.

(6) United States bondholders have won numerous court rulings against Argentina
relating to Argentina's default on debt owed to such bondholders and Argentina's
decision to repeatedly ignore these judgments threatens the United States
legal system. Despite having agreed to submit to the jurisdiction of the
State of New York and to waive claims of sovereign immunity, Argentina is
now contesting at least 170 lawsuits and refusing to honor 100 judgments
against it, totaling more than $7,000,000,000.

(7) Argentina has demonstrated a similar disregard for claims brought by
United States investors before the International Centre for Settlement of
Investment Disputes (ICSID), a tribunal of the World Bank. Argentina is
the respondent in more ICSID cases than any other nation, now accounting
for more than a quarter of the tribunal's caseload. It is important to note
that Argentina's arguments for nonpayment have been outright rejected by
both the Department of State and the ICSID. Argentina is currently receiving
$5,810,000,000 from the World Bank and has requested an additional $1,630,000,000
in funding. Argentina has behaved in a manner that undermines the viability
of the ICSID process, thereby alarming the worldwide investments of United
States businesses that rely upon this forum for adjudication of disputes.

(8) Argentina's debts are legitimate. Any assertion that the Argentine debt
now outstanding was incurred by the repressive, nondemocratic regimes that
ruled Argentina in the late 1970s and early 1980s is inaccurate. The bonds
currently held by United States creditors were not incurred by nondemocratic
regimes; rather, they were issued by democratically elected Argentine governments.

(9) While it is true that the Argentine military junta--which caused tremendous
suffering during a tyrannical 7-year reign--borrowed from foreign banks,
96 percent of that debt was refinanced in 1993 when Argentina's `Brady Plan'
restructuring was completed. That restructuring was underwritten by the
United States Government. Prior to the Brady Plan restructuring, Argentina
had undergone two `major restructurings' of its foreign debt--the first
in 1985, and the second in 1987.

(10) None of the debt now held by United States creditors dates from the
days of the Argentine military junta. Further, even if it were fair to characterize
the debt issued in the 1993 Brady Plan restructuring as somehow derivative
of junta-era debt--a notion that maligns the United States policymakers
who approved and underwrote the Brady Plan on behalf of the American people--only
five percent of the defaulted debt now held by United States creditors was
issued during or before 1993. Ninety-five percent of the defaulted debt
held by United States creditors was incurred after 1993 by freely elected
Argentine governmental officials and has no relationship to the military
junta.

(11) Argentina's defaults have raised the costs of borrowing for both the
public and private sectors. If the country took action to remediate its
debts, its annual interest expense would certainly decline. Argentina's
defaults have discouraged foreign direct investment. One study from 2007
states that Argentina loses over $6,000,000,000 in foreign direct investment
every year as a result of its default and debt repudiation and the resultant
risk profile.

(12) An October 2010 evaluation report by the Financial Action Task Force
(FATF), an intergovernmental body that analyzes financial systems for criminal
activity, gave Argentina the most negative evaluation of any G-20 nation.
FATF evaluated Argentina on 49 financial standards, of which Argentina failed
to meet 47 out of the 49 standards. Argentina was given an original timeline
of three months, then an additional ten months to demonstrate compliance
to the standards or face being blacklisted due to financial corruption and
deficiencies in combating financing of terrorism (CFT) and anti-money laundering
(AML) systems.

(13) Drawing further conclusions, FATF reported several shortcomings in
Argentina's financial sector, most notably corruption and the poor enforcement
of Argentine financial laws. The lack of enforcement has prompted wide-spread
money laundering in Argentina's financial sector creating an environment
that puts Argentina at risk of becoming a hub for terrorism and drug trafficking
in the Western Hemisphere.

(14) Many persons in the United States are unaware of Argentina's irresponsible
behavior and disregard for the rule of law. Further, United States citizens
continue to invest in, lend to, and do business with Argentina and are unfamiliar
with the associated risks.

(15) Those who are injured as a result of this conduct often have little
or no recourse. Judgment evading foreign states and their state owned corporations
enjoy a safe haven within their national borders, and this fact often presents
an insurmountable obstacle to recovery for those who are injured by the
behavior of those states.

(16) The absence of a remedy for defaults by such foreign states undermines
nations that badly need to access capital from foreign lenders, with disproportionate
harm falling on responsible and democratic nations. By undermining confidence
in the secondary market for sovereign debt, judgment evading foreign states
significantly increase the risk that primary lending to less-advantaged
nations will be curtailed, depriving deserving sovereign borrowers of access
to the international capital markets.

(17) Action by the United States Government to combat this growing problem
must include measures that both protect against the irresponsible conduct
of judgment evading foreign states and their state owned corporations, and
motivate such states and corporations to raise their standards of behavior.

(18) An effective means of achieving this important objective is to deprive
judgment evading foreign states and their state owned corporations of the
privilege of issuing securities or borrowing in the United States, and requiring
that warnings of their irresponsible behavior be given to persons in the
United States who are contemplating investing in, lending to, or doing business
with such states and businesses, until those states demonstrate that such
measures are no longer necessary.

SEC. 4. DEFINITIONS.

For purposes of this Act:

(1) AGENCY OR INSTRUMENTALITY OF A FOREIGN STATE- The term `agency or instrumentality
of a foreign state' has the meaning given that term in section 1603(b) of
title 28, United States Code.

(2) FINAL JUDGMENT- The term `final judgment' means any judgment of a United
States district court, the Court of International Trade, or the court of
any State, that is no longer eligible to be appealed to any court in the
United States.

(3) FOREIGN STATE- The term `foreign state' has the meaning given that term
in section 1603(a) of title 28, United States Code, except that it does
not include an agency or instrumentality of a foreign state.

(4) INTERNATIONAL ORGANIZATION- The term `international organization' means
an entity designated by the President as being entitled to enjoy the privileges,
exemptions, and immunities provided by the International Organizations Immunities
Act (22 U.S.C. 288 et seq.).

(A) has one or more judgments entered against it by any United States
district court, the Court of International Trade, or the court of any
State, the combined amount of which judgments exceeds $100,000,000;

(B) fails to satisfy in full any such judgment for a period of more than
two years after the judgment becomes a final judgment, regardless of whether
such judgment became a final judgment before the date of the enactment
of this Act; and

(C) is not a foreign state eligible for--

(i) financing through the International Development Association but
not from the International Bank for Reconstruction and Development;
and

(ii) debt relief under the Enhanced HIPC Initiative (as defined in section
1625(e)(3) of the International Financial Institutions Act) or under
the Multilateral Debt Relief Initiative.

(6) STATE OWNED CORPORATION OF A JUDGMENT EVADING FOREIGN STATE- The term
`state owned corporation of a judgment evading foreign state' means any
corporation or entity, other than a natural person--

(A) that is an agency or instrumentality of a foreign state that is a
judgment evading foreign state; or

(B) a majority of the shares or other ownership interest of which is held,
either directly or indirectly, by a judgment evading foreign state or
by an agency or instrumentality of a foreign state that is a judgment
evading foreign state.

(7) STATE- The term `State' means each of the several States, the District
of Columbia, and any commonwealth, territory, or possession of the United
States.

SEC. 5. STATEMENT OF POLICY.

It shall be the policy of the United States--

(1) to advocate within the governing bodies of international organizations,
international financial institutions such as the World Bank and the International
Monetary Fund, and other foreign policy settings for the full compensation
and fair treatment of United States taxpayers in whose favor judgments have
been awarded by the United States courts;

(2) to seek to protect the economic interests of such taxpayers and other
persons and of nations that benefit from a reliable flow of foreign capital
by--

(A) restricting the access to the United States capital markets of judgment
evading foreign states and their state owned corporations;

(B) requiring that such persons be warned of the dangers of investing
in, lending to, or doing business with such states and state owned corporations;
and

(C) call on the World Bank, the International Monetary Fund, and other
international financial institutions to vote against providing funding
or foreign capital to judgment evading foreign states; and

(3) to further solidify the authority of the United States courts by preventing
judgment evading foreign states from willfully disregarding the judgments
of those courts.

SEC. 6. BAR ON ACCESS TO UNITED STATES LENDERS AND INVESTORS.

(1) take all necessary measures to deny every judgment evading foreign state
access to United States capital markets, including the ability, directly
or indirectly, to borrow money or sell securities in the United States;
and

(2) require that all periodic filings made by the judgment evading foreign
state with the Securities and Exchange Commission under the securities laws
bear the following legend prominently on the cover page: `WARNING: THIS
REPORT IS SUBMITTED BY A FOREIGN STATE THAT HAS BEEN DETERMINED BY THE UNITED
STATES DEPARTMENT OF THE TREASURY TO BE A JUDGMENT EVADING FOREIGN STATE
BASED UPON ITS FAILURE TO SATISFY OUTSTANDING UNITED STATES COURT JUDGMENTS.'.

(b) Measures With Respect to State Owned Corporations of Judgment Evading
Foreign States- If any judgment evading foreign state remains in default on
any final judgment for more than three years, irrespective of whether such
judgment became final before the date of the enactment of this Act, the Securities
and Exchange Commission shall--

(1) take all necessary measures to deny any state owned corporation of a
judgment evading foreign state access to the United States capital markets,
including the ability to issue debt, equity or other securities, or borrow
money, unless the proceeds of such borrowing of securities issuance are
to be used, in the first instance, to satisfy in full all final judgment
against its parent judgment evading foreign state; and

(2) require that all periodic filings made by each state owned corporation
of a judgment evading foreign state with the Securities and Exchange Commission
under the securities laws bear the following legend prominently on the cover
page: `WARNING: THIS REPORT IS SUBMITTED BY A STATE OWNED CORPORATION OF
A FOREIGN STATE THAT HAS BEEN DETERMINED BY THE DEPARTMENT OF THE TREASURY
TO BE A JUDGMENT EVADING FOREIGN STATE BASED UPON ITS FAILURE TO SATISFY
OUTSTANDING UNITED STATES COURT JUDGMENTS.'.

(a) Bilateral Assistance- Whenever any proposal is made to a department, agency,
or other instrumentality of the United States Government to extend aid, a
loan, or any other form of assistance to a judgment evading foreign state,
the head of the department, agency, or other instrumentality may consider
the proposal only if it bears prominently the legend described in subsection
(c).

(b) Multilateral Assistance- Whenever any proposal is made to an international
organization to extend aid, a loan, or any other form of assistance to a judgment
evading foreign state, the Secretary of State shall provide prompt notice
of such proposal to the Congress. Such notice shall bear prominently the legend
described in subsection (c).

(c) Legend Described- The legend of a proposal referred to in subsection (a)
and the legend of a notice referred to in subsection (b) is the following:
`REQUEST FOR GRANT-IN-AID OR LOAN BY A JUDGMENT EVADING FOREIGN STATE.'.

SEC. 8. REPORTS; RECOMMENDATIONS OF ADDITIONAL MEASURES.

(a) Annual Reports to Congress- Not later than January 31 of each year, the
Secretary of the Treasury shall provide a report, in writing, to the Congress
identifying each judgment evading foreign state, and, for each such judgment
evading foreign state--

(1) quantifying the impact on the United States economy, and cost to United
States taxpayers, of the unsatisfied final judgments outstanding against
the judgment evading foreign state; and

(2) describing all measures that the Secretary of the Treasury and the Securities
and Exchange Commission have taken in the preceding year to carry out this
Act.

(b) Consideration of Documents and Other Information- The Secretary of the
Treasury may consider documents and other information received from third
parties and from judgment evading foreign states in preparing each report
under subsection (a).

(c) Termination of Designation- At such time as the Secretary of the Treasury
determines that any judgment evading foreign state no longer qualifies as
a judgment evading foreign state, the Secretary shall so certify to the Congress
no later than in the next annual report to Congress under subsection (a),
at which time the requirements and prohibitions under this Act shall no longer
apply to such former judgment evading foreign state, or to any state owned
corporation of such judgment avoiding foreign state. The Secretary may consider
documents and other information received from third parties and from the judgment
evading foreign state in making this determination.

(d) Other Public Reports To Include Information About Judgment Evading Foreign
States- The Secretary of State, the Secretary of the Treasury, and the Secretary
of Commerce shall each reference the findings of the Secretary of the Treasury
from the Secretary's most recent annual report to Congress under subsection
(a) relating to the unsatisfied final judgments outstanding against the judgment
evading foreign state in every report prepared for the public relating to
the country risk or investment climate of such judgment evading foreign state.

(e) Additional Measures- The Secretary of the Treasury shall recommend to
the Congress in writing additional measures to carry out the purposes of this
Act.